Corporate renewable PPAs hit record high in 2021, but not in Australia

A record 31.1GW of renewable energy was contracted by big businesses around the world in 2021, new data has revealed, as ever cheaper solar and wind power purchase deals offered up a “silver bullet” for private sector decarbonisation.

A report from Bloomberg New Energy Finance on Monday showed a surge in corporate PPAs over the past 12 months, delivering a nearly 24% jump on the 25.1GW of new renewables capacity that was contracted to companies in 2020.

According BNEF’s 1H 2022 Corporate Energy Market Outlook, wind and solar offtake contracts were publicly announced by more than 137 corporations in 32 different countries in 2021, accounting for whopping 10% of all the renewable energy capacity added globally for that year.

This contrasts with the corporate PPA trend in Australia which, as RenewEconomy reported here, was in October found to be tracking at almost half the record 1.3GW of new capacity that was contracted in 2020.

At the time, the latest State of the Market Report from the Business Renewables Centre Australia put the lull in PPA activity in Australia down to a combination of Covid 19 and falling wholesale electricity prices working to dampen demand.

In the BNEF report, Australia barely rates a mention, except for a note under the first chart (above) that “sleeved PPAs” in Australia were not counted in the data. This appears to refer to deals done with big gen-tailers such as Snowy Hydro, which had previously contracted large chunks of renewable energy supply and later on-sold portions of this to various corporate customers.

Australia aside, the data shows the Americas accounted for two-thirds of last year’s record-setting activity, with 20.3 gigawatts of PPAs announced. This was led by the US at 17GW, the majority of that number being classed as virtual PPAs, which function in a similar way to a financial hedge.

Europe saw a record 8.7GW of deals announced, while Asia lagged well behind with just 2GW of PPAs announced. BNEF notes, however, that legislation for a corporate PPA model in South Korea was introduced in October 2021, while China and Japan both saw record clean energy certificate issuances.

At a sector-by-sector level, BNEF found that tech companies were the largest corporate renewable energy buyers in 2021, with US online retail giant Amazon topping the ranks for the second year in a row, with 44 offsite PPAs in nine countries, totalling 6.2GW.

This brings Amazon’s total renewable PPA capacity to 13.9GW, making its portfolio the 12th largest globally among all types of companies – including power utilities – just ahead of EDF.

Microsoft and Meta (Facebook) ranked next highest among corporations, at 8.9GW and 8GW, respectively. BNEF notes that Google, which has previously held the corporate PPA crown, has turned its focus to “other methods” of sourcing renewables.

“It is no longer a matter of whether corporate clean energy procurement will grow each year, it’s a matter of how much,” said Kyle Harrison, BNEF’s head of sustainability research.

“More corporations are making new sustainability commitments, costs for renewables are plummeting and regulators around the world are slowly coming around to the fact that clean energy might be a silver bullet in the decarbonisation of the private sector.”

“The clean energy portfolios of big tech companies now rival those of the world’s biggest utilities,” added Helen Dewhurst, a senior associate at BNEF.

“Big tech faces mounting pressure from investors to decarbonise and this is reflected in the steep increase in clean energy volumes purchased. The PPAs inked in previous years pale in comparison to the portfolios announced in 2021.”